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PARIS--Google Inc.'s recent deal with the French government to create a 60
million euro fund ($81.3 million) to help French newspaper and magazine
publishers develop their internet presence is a welcome alternative to the
government's threat of a law aimed at forcing Google and other indexing
companies to pay copyright royalties to publishers, business sources told BNA on
Feb. 5.

French President Francois Hollande and Google President Eric Schmidt
announced on Feb. 1 that they had signed a memorandum of understanding under
which the U.S. search engine giant will create a Digital Publishing Innovation
Fund to help French media develop their online publishing. The company will also
help French publishers increase their advertising revenues using Google
technology, Schmidt said.

The French government had threatened to propose a law in the French
Parliament that would have required news aggregators to pay so-called ancillary
royalties to French newspapers and magazine publishers to compensate them for
linking to their copyrighted content. Google had threatened to stop indexing
French publications if such a measure were implemented here.

Under the deal, “Google will not be paying for any links to French content,”
a Brussels-based Google official told BNA.

However, other Google officials told BNA the company currently has no plans
to try to reach a similar agreement with publishers in Germany, where Google
continues to face the threat of such a law (232 PTD, 12/4/12).

Not a 'Payoff'

Google rejected the assertion that the deal constitutes a quid-pro-quo
payment to maneuver around the royalty law.

“It's a constructive business agreement, not a payoff. We favor business
deals and focus on what we can do business-wise,” a France-based Google
spokesman said.

The company reached a similar arrangement with Belgian publishers in
December, Google said.

French associations for information technology equipment manufacturers, web
and e-commerce businesses, welcomed the news of the French agreement.

“We consider that an agreement is always better than a bad law,” Nathalie
Laîné, a spokeswoman for the Federation of E-Commerce and Distance Selling (the
Fédération du e-commerce et de la vente à distance, known as “Fevad”)
told BNA.

Xavier Autexier, delegate general for the French Syndicate for Information
Technology Industries (the Syndicat de l'industrie des technologies de
l'information, or the SFIB), agreed. “In the context of development and
evolution of the digital economy in France, it is better to have a discussion
and negotiation than a law that could have caused collateral damage to other
players,” he said.

For example, Autexier said the French government has also discussed imposing
a tax on equipment storage media makers to use to compensate content creators,
“which would be harmful and unfair to equipment companies.”

But Giuseppe Demartino, president of the French Association of Internet
Community Services (the Association des services internet communautaires,
or ASIC), of which Google is a founding member, said “the government's
threatened [ancillary royalty] law seemed a bit shaky, or improvised, in any
case.”

Details to Work Out

The Brussels-based Google official said the digital innovation fund will be
aimed at helping French-language newspaper and magazine publishers develop new
ways to provide content online to their readers. “It will be open to all types
of publishers, not just the big established ones.”

French newspaper and magazine publishers had unsuccessfully attempted to
establish their own advertising platform. Under the deal, “French publications
will be coming onto the Google [advertising] exchange platform,” he said.

Specifically, that means establishing business partnerships in which French
publishers will be using such services as Google Currents, AdWords, Google Plus,
and AdSense, among other things, to better “monetize” their content, the
official said.

Google said details remain to be worked out on the French agreement, so the
memorandum signed by Hollande and Schmidt could take about 60 days to be
converted into a full contract.

On Dec. 12, Google reached a similar agreement with Belgian newspaper and
magazine publishers, ending a seven-year legal battle. However, that agreement
did not include creation of an innovation fund, the official said.

German Case Different

Google said the French and Belgian deals are unlikely to serve as a model for
an agreement in Germany, because the situation there is different.

Germany's lower house of parliament has already begun considering a copyright
bill that would require search engine companies such as Google to pay for
providing links to news articles (232 PTD, 12/4/12).

“Although there have been some calls in Germany to have an agreement like the
French one, the government still wants a law, and they have an actual proposal
[for a law],” the Google official said.

“We are fighting it pretty hard, telling people that it will ruin the
internet in Germany. But it's too early to say what will happen in Germany,” he
said.

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